Originally created 01/24/04

Halliburton acknowledges kickback allegations in Iraq contract



WASHINGTON -- Halliburton has fired employees who allegedly took kickbacks from a Kuwaiti subcontractor helping to supply U.S. troops in Iraq, the company said.

Spokeswoman Wendy Hall said Friday the company reported the "irregularities" to Pentagon auditors and criminal investigators.

"We found it quickly, and we immediately reported it," Hall said in a statement. "We do not tolerate this kind of behavior by anyone at any level in any Halliburton company."

The Wall Street Journal reported Friday that two employees of Halliburton subsidiary KBR accepted up to $6 million in kickbacks from the unnamed Kuwaiti firm. Hall said the company could not discuss specifics of the charges.

The kickback allegations involve KBR's contract to supply U.S. Army troops in Iraq, not its separate contract to rebuild Iraqi oil facilities and deliver gasoline to civilians. Pentagon auditors are seeking a criminal probe into findings that KBR and Kuwaiti firm Altanmia Marketing Co. overcharged by $61 million for fuel deliveries.

Halliburton, Vice President Dick Cheney's former company, has denied overcharging on that contract.

Friday's disclosure is the first admission by Halliburton that its employees were involved in possible corruption involving Iraq contracts.

Halliburton disclosed last year that another KBR employee paid more than $2 million in bribes to a Nigerian official to get favorable tax treatment. A French judge investigating a KBR joint venture in Nigeria with a French firm has reportedly warned that Cheney, who headed Halliburton from 1995 until 2000, could be subject to criminal charges in France. Cheney has denied any wrongdoing.

Democrats on Friday renewed their criticism of Halliburton and their demands for further investigations into the company's contracts.

"All of Halliburton's contracts with the government need to be terminated," said Sen. Frank Lautenberg, D-N.J. "This is a fatal blow to the company's credibility and the administration's ability to defend these contracts."

Critics have cited Halliburton's contracts as evidence of Bush administration favoritism toward corporate friends. White House and Pentagon officials say the Defense Department's contract decisions are not affected by political concerns.

On the Net:

Halliburton: http://www.halliburton.com